Tax planning

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vinod kumar (Querist)
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22 January 2012 one company has an agricultural land. the land was compulsorily acquired by govt. now the company filed a suit against the govt for enhancement of compensation and won the case. now company is going to receive a sum of rs 50 lakh in which 60% is the interest on enhanced compensation and 40% is the compensation. now my question are....
1) is the sum received by the company is exempt under income tax act?
2) interest component received by the company is income from other sources. can the company calim a deduction of 50% u/s 57 of the income tax act from the interest component?

pls help me to solve these queries. thanks in advance

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 January 2012 1. Sum received by the company is not exempt.
Section 10(37) is applicable to Individual and HUF only.
.

2. 50% Deduction will be available U/s 57 in respect to interest only.

vinod kumar

vinod kumar (Querist)
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25 January 2012 but sir agricultural land acquired by the govt falls in the rural area, that land is not a capital asset, so there is no question of capital gains. pls confirm back.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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25 January 2012 HAD THE FACT, THAT THE LAND IS RURAL AGRI. LAND, HAS BEEN MENTIONED IN THE ORIGINAL QUERY, I COULD REPLY ACCORDINGLY.
.
IN CASE OF RURAL LAND CAPITAL GAINS WILL NOT ARISE.
.
INTEREST, HOWEVER WILL NOT BE EXEMPT.

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vinod kumar

vinod kumar (Querist)
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26 January 2012 thank you very much for the help sir....

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